A letter of demand, a collector's call, a default notice, or an unpaid invoice has turned into a dispute.
The forum, the questions to ask about any debt before paying or suing, and the free services built for exactly this.
A consumer credit solicitor at a community legal centre.
What is different about a money matter
- The forum is built for self-representation. Small claims divisions and consumer tribunals often restrict representation, keep costs low, and run informally. You are expected to be there without one.
- The forum depends on the kind of claim, the jurisdiction and the amount. Each state has thresholds and each forum has its own subject-matter limits. In NSW, for example, the Local Court's small claims division handles claims up to $20,000 and NCAT's consumer claims up to $100,000, but NCAT consumer claims must be brought within three years and not every dispute is a "consumer claim". Other states differ.
- Old debts may not be enforceable. A debt generally cannot be sued on after the limitation period, six years in NSW from when it fell due under the Limitation Act 1969. NSW is unusual: on expiry the Act extinguishes the right itself (section 63), and a written acknowledgement or part payment extends time only if it is made before expiry (section 54). Some other states treat an old debt as unenforceable rather than extinguished, and their rules on restarting differ. In any state the limitation defence has to be raised; it is not applied for you. Do not pay, acknowledge in writing, or promise anything on an old debt before checking, and get advice before relying on this.
- Debt collectors have rules. Contact hours, frequency and conduct are regulated. A record of calls and letters is evidence.
- Complaint schemes sit beside the courts. Disputes with banks, lenders, insurers and telcos can go to a free ombudsman scheme instead of court, and often should. A complaint restricts a financial firm's recovery action while it is being considered, with exceptions, but it does not stop a court deadline that is already running; respond to the court by its deadline, or obtain a valid extension or stay, in the way the court's rules require.
Court, time limits, first steps
Local or Magistrates Court small claims for smaller amounts; the state civil tribunal for consumer and some commercial claims; a court above that for larger sums. Financial firms: the Australian Financial Complaints Authority first.
Limitation periods for debt are years, not months, but they run from a date you may have to work out, and they can be restarted. Court claims against you have short response periods. In NSW a statement of claim gives you 28 days after service to file a defence; other states set their own period. Missing it can mean judgment by default, which can be set aside on application but not easily and not automatically.
Do not pay, promise, or admit anything by phone. Ask for the claim in writing with the contract, the account history and the amount broken down. The example letters include a request for the basis of a demand.
A short open letter of demand with the amount, the basis, the documents, and a date. Then the ladder. Check whether the debtor can actually pay before you spend a filing fee finding out.
If the debt is real and you cannot pay, financial counselling is free and can negotiate hardship arrangements. Bankruptcy and debt agreements are formal steps with lasting consequences; get advice before either.
If you are being chased
Three questions before anything else: Is this debt mine? Is it the right amount? Is it still enforceable? Write to the creditor or collector asking for the documents that answer each. Log every contact. If a court document arrives, the response period is real and runs from service; the deadlines guide is for that day. If the creditor is a bank, lender or insurer, an ombudsman complaint is free and does not need a lawyer; it restricts most recovery action while it is considered, but it does not pause a court's clock.
If you are owed
Assemble the record first: the agreement, the invoices, the reminders, the payments. Send one clear letter of demand with a date. If nothing happens, the small claims forum for your amount is designed for you to file in yourself, usually online. Judgment is only useful if the debtor has money; enforcement is a further step with its own fees.
Which guides apply
- The first 48 hoursA demand letter is the letter this guide was written for.
- Orders, directions and deadlinesA letter's deadline and a court's deadline are not the same thing.
- Itemise an overwhelming scheduleAn account history or a list of charges, line by line.
- Request → refusal → exhibitAsk for the documents; keep the refusal.
- Build a clear legal letterThe letter of demand, or the reply to one.
- Correspondence logEvery call and letter from a collector, dated.
Official resources
- National Debt Helpline, 1800 007 007, free financial counselling in every state
- Australian Financial Complaints Authority for banks, lenders, insurers and superannuation
- Financial Rights Legal Centre, debt and credit legal information and help
- Australian Financial Security Authority, the official source on bankruptcy and debt agreements
- Your state's small claims court and tribunal pages on the resources page